Tuesday, October 20, 2009

Pol Makes A Good Point

So bad, it's fallen off the official chart

Today's horrific public borrowing figures underline the need for drastic action. So far in 2009-10, Brown's government has borrowed £77bn, which puts us well on course for busting through £200bn over the year as a whole (the budget forecast was £175bn).

Even setting aside Brown's much hyped capital spending programme, the current deficit year-to-date is £61.5bn - so big, it can no longer be accommodated on the official ONS chart (see above). And our net debt now stands at £825bn - which means the latest estimate of our real national debt we blogged yesterdayalreadyneeds increasing by £20bn.

The dials are spinning, my friends, and unless someone grabs the controls soon, I'm very much afraid we're going down.

"...an extra £120bn will need to be taken out of current spending to achieve budget balance by 2015-16. Such savings cannot be achieved by tinkering at the edges, but will require radical public sector reform. We have identified how the required savings might be achieved by re-engineering the ways in which public services are delivered. By introducing new technology and competition, eliminating waste and inefficiency, and tackling unaffordable pensions and pay head on, we can avoid crude cuts to frontline staff and the vital services on which we all depend."

Their £120bn spending reduction is a cumulative total spread over three years, and it breaks down like this:

£63bn from "radically re-designing the way public services are delivered, including making use of new and proven technologies, as well as increasing competition"

£27bn from "improving workforce management" - specifically, a two year pay freeze, tackling the sickie problem, and gripping public sector pensions

But wait... what's this? Polly actually goes on to make a very good point. Homing in on the CBI's enthusiasm for more outsourcing, she says:

"The CBI claims private contractors can process arrested people through custody suites more cheaply by freeing up police from paperwork, and that private civilian companies can provide basic logistics for the forces more efficiently than using trained soldiers, which sounds convincing.

Or at least it sounds convincing until you consider the forces' abysmal record for striking good contracts with commerce. That's just the problem. Weak public managers are often even worse at drawing up private finance initiative, public-private partnership or even bog-standard procurement deals with the private sector. The danger is that canny companies will run rings round civil servants with neither the knowledge not the greedy motivation to squeeze out every penny's worth."

Spot on Pol. As we've highlighted over and over again on BOM, whether because he's naive, or stupid, or lacks your greedy motivation, the Simple Shopper is absolutely pants at driving deals with the private sector. He cannot be trusted to do it. Which is a serious flaw in the CBI "blueprint".

So if outsourcing is out, what should we do instead?

Pol's solution is pretty well to keep everything in-house, and hope that the public sector can somehow get more efficient by rolling out best practice. Kind of idea.

Our solution is to go way beyond what the CBI suggests. We don't want yet more cack-handed outsourcing arrangements - everything from hospital cleaning to IT shows that the public sector cannot manage them. What we need instead is for government to divest itself of its intermediating role between customer and supplier.

We need... yes, you've heard it all before... choice and competition. We need the spending power put directly into the hands of customers, and we need competing suppliers. So school vouchers, competing social health insurers, directly elected sheriffs, fiscal decentralisation, etc etc. Except for the core functions of the state (law and war, and in this day and age, some minimum welfare safety net), we need to take our bungling Big Government out of the equation.

Such radical reform would not only solve the problem of Simple Shopper outsourcing, it is actually the only way of driving the efficiency savings that comprise the bulk of the CBI's £120bn. Disembodied managerialist efficiency drives just don't deliver such savings: we've had no end of failed attempts over the years, most recently the Gershon farce.

And just be clear about this - the money has run out. Spending cuts are unavoidable.

If we make the choice and competition leap, there's just a chance we can get through by driving out waste rather than hobbling our frontline services.

BOM the book now available

Drawing on six years of blogging government waste, this book shows how we spend far more than we need on our public services. It sets out the facts and explores the underlying issues. Just why does government spend so much and deliver such second rate service? Why do we put up with it? And what are the alternatives?

ABOUT BOM

Despite all the talk of cuts, government still consumes nearly half our national income. Yet many tens of billions of its spending is wasted, with taxpayers made to pick up the tab for a depressing array of overpriced sub-standard services. This is money we can no longer afford, and our National Debt is already at danger level.

If we're to avoid further decades of stagnation and austerity we urgently need to find another way. Exposing and understanding the wastefulness of government is a necessary step in the right direction.